A margin call occurs when your equity falls below the required margin level to maintain open positions. The broker demands additional funds to avoid the closure of your positions. If you don’t add funds, the broker may close positions to cover the shortfall.
A margin call is a warning that your account may be at risk of liquidation. It’s crucial for traders to understand margin calls to prevent their positions from being closed, which could lead to substantial losses.
If your equity falls to $200 while your margin requirement is $500, a margin call will be issued. To prevent your positions from being closed, you must either deposit more funds or close some trades.
Test your knowledge of margin calls in forex trading with the following questions:
